Capitalizing on New Manufacturing Technologies: Current Problems and Emergent Trends in U.S. Industry

PAUL S. ADLER

Numerous industries in the United States have been slow to capitalize on new manufacturing technology. Consider these examples:

  • The United States has only one-third as many robots as Japan (Flamm, 1986).

  • Use of basic oxygen furnaces and continuous casting in the steel industry has spread much more slowly in the United States than in other countries (Office of Technology Assessment, 1980).

  • The proportion of machine tools that are numerically controlled is less in the United States (40 percent) than in either Japan (67 percent) or Germany (49 percent) (Collis, 1987).

  • Once the commitment is made to install new process equipment, U.S. firms take longer to get up and running than Japanese firms—in the case of flexible manufacturing systems (FMS), 2.5 to 3 years and 25,000 work hours versus 1.25 to 1.75 years and 6,000 hours (Jaikumar, 1986).

  • U.S. firms fail to exploit the new technologies' capabilities; in the FMS case, U.S. systems typically produce 10 parts versus 93 in Japanese systems (Jaikumar, 1986).

  • Moreover, U.S. industry tends to do poorly at the process of continuous incremental improvement that has been perfected in some Japanese companies as Kaizen (Imai, 1986). Two of three Japanese employees submit suggestions to save money, increase efficiency, or boost morale versus only 8 percent of U.S. Workers.



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People and Technology in the Workplace Capitalizing on New Manufacturing Technologies: Current Problems and Emergent Trends in U.S. Industry PAUL S. ADLER Numerous industries in the United States have been slow to capitalize on new manufacturing technology. Consider these examples: The United States has only one-third as many robots as Japan (Flamm, 1986). Use of basic oxygen furnaces and continuous casting in the steel industry has spread much more slowly in the United States than in other countries (Office of Technology Assessment, 1980). The proportion of machine tools that are numerically controlled is less in the United States (40 percent) than in either Japan (67 percent) or Germany (49 percent) (Collis, 1987). Once the commitment is made to install new process equipment, U.S. firms take longer to get up and running than Japanese firms—in the case of flexible manufacturing systems (FMS), 2.5 to 3 years and 25,000 work hours versus 1.25 to 1.75 years and 6,000 hours (Jaikumar, 1986). U.S. firms fail to exploit the new technologies' capabilities; in the FMS case, U.S. systems typically produce 10 parts versus 93 in Japanese systems (Jaikumar, 1986). Moreover, U.S. industry tends to do poorly at the process of continuous incremental improvement that has been perfected in some Japanese companies as Kaizen (Imai, 1986). Two of three Japanese employees submit suggestions to save money, increase efficiency, or boost morale versus only 8 percent of U.S. Workers.

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People and Technology in the Workplace The Japanese make 2,472 suggestions per 100 eligible employees versus only 13 per 100 eligible employees in the United States (Wall Street Journal, 1989). This chapter argues that underlying these symptoms is a deeper malady: U.S. industry is having difficulty shifting from a static to a dynamic model of management. In the static model, innovations such as the introduction of computerized equipment were slow to develop and, once installed, modifications were discouraged or prohibited. When technologies develop at a more rapid pace, a more dynamic model is needed that facilitates more frequent technological change and encourages a process of continuous improvement at all levels of the organization. This chapter identifies key problems and emergent trends in industry's efforts to meet the challenge of this new model. The tone is one of urgent concern: the United States is not doing well thus far. Productivity growth is still slower than it was in the first two decades after World War II and slower than that of our major trading partners. The manufacturing sector has seen an improvement since 1979, but Japan is still outpacing the rate of increase in our labor productivity, and our balance of trade is still in serious deficit. Since the United States is becoming more deeply embedded in the world economy, performance relative to our trading partners is progressively more important to our living standards. These trends in performance spell stagnant living standards and increasing desperation for those trapped at the bottom of the income scale. Even middle-income Americans feel a growing sense of frustration when they see how little progress they have made over the last two decades. Such a state of affairs has many roots, and the performance of manufacturing firms is but one of them. Despite the importance of the social, political, and macroeconomic factors that contribute to the problems, this chapter addresses these broader factors only where they touch directly on the conduct of business. This focus does not imply that business alone is to blame for our current predicament; only that it has much to contribute to resolving it. Since the elements of this story are numerous and complex, an organizing framework is used here to classify these impediments and trends. The framework highlights six general areas of concern: technology, skills, procedures, structure, strategy, and culture. Each of these elements is discussed in turn, beginning with the major problems and then the more hopeful signs in U.S. manufacturing.

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People and Technology in the Workplace One key trend in each area is the increasing recognition that people—executives, supervisors, engineers, workers, union officers—play critical and interrelated roles in the process of dynamic change. The three case studies that follow provide practical examples of manufacturing firms introducing technological and organizational changes that are mutually supportive, involving consumers, suppliers, and employees in the process. In these cases we see how the effective implementation of new technologies—an automated storage and retrieval system at the Boeing Company (Gissing, in this volume), a distributed process control system at International Bio-Synthetics, Inc. (Hettenhaus, in this volume), and an automatic in-process gauging system at Consolidated Diesel Company (High, in this volume)—both required and facilitated related changes in areas such as employee skills training, hierarchical management structures, and the culture of the plant floor. While each organization developed its own approach, one theme central to all of them was the development of horizontal and vertical collaboration. Teamwork, for example, was actively reinforced through changes in worker rotation procedures at International Bio-Synthetics, new training facilities at Consolidated Diesel, and early union and management involvement at Boeing. These cases illustrate various combinations of the problems and trends discussed and elaborated on in this chapter, and their implications for people and technology in the future development of manufacturing industries. TECHNOLOGY The current state of technology itself creates some important impediments to its implementation. Most notable are the lack of standards and continued inflexibility: Lack of widely accepted standards impedes data communication between subunits using different systems. Even when CAD workstations are being used, drawings are recreated many times in the subunits, a process that is both costly and error-prone. One equipment vendor polled its customers (mainly in metalworking) and found companies typically recreated the geometry of their drawings five times between development and delivery, usually at stages such as layout, styling, drafting, finite 5 element analysis, manufacturing documentation, numerical control (NC) programming, and development of installation and service manuals (Automation Technology Products, 1985).

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People and Technology in the Workplace Despite the promise of programmable flexibility, manufacturing technologies are still too inflexible to allow the introduction of new product designs into manufacturing without extensive disruption. The installed base of equipment in U.S. industry is not as computerized as it could be, and those that have pushed ahead aggressively with computer control have found that it requires a great deal of engineering overhead to achieve the promised flexibility. These technology bottlenecks must be seen in the context of the specific technical demands of the manufacturing environment (National Research Council, 1988). Because time is often of the essence, systems that are too slow will not be used, no matter how much more efficient they are in specially designed benchmarking tests. Change in products, processes, technology, markets, and competition directly constrain the usefulness of rigid but otherwise elegant systems. Further, the enormous complexity of modern manufacturing systems overwhelms many information systems. It is not uncommon for the memory requirements of the manufacturing information system to be one or even two orders of magnitude greater than the rest of the business's computer systems combined. These technological limitations are progressively being surmounted. The emergent trends can be classed in six categories (Institute for Defense Analyses, 1988): Information capture. In design, an increasing number of companies are making the commitment to develop a common product-definition data base from which different subunits can all work. In manufacturing, sensor-based control of equipment has been identified as a key research topic by the National Science Foundation. Information representation. This is primarily a problem of standards, and several initiatives are under way in the area of engineering specifications to permit the use of information by different hardware and software systems, for example, the Department of Defense Computer-aided Acquisition and Logistics Support program and the Product Data Exchange Specification effort. Data presentation. The bottlenecks here are being surmounted with important progress in graphics, 3-D and solid modeling, video-conferencing, and high-speed printing. Data manipulation. Here developments are progressing at a rapid rate in such areas as finite element analysis, continuous fluid dynamics, and discrete event simulation.

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People and Technology in the Workplace System environments. Surrounding the preceding four elements is the system environment that ensures the integration of disparate tools, controlled sharing of information, tracking of design information, configuration control, and monitoring of the design process. In this domain, several competing efforts to develop system environments are currently under way. Enabling technologies. Underlying all these activities is the development of enabling technologies such as object-oriented programming, expert systems, and relational data bases. The current state of technology constrains not only major process innovations but also the continuous improvement process. Most automated systems are not designed to accommodate the inevitable process of tool adaptation and extension. The model that underlies most system design assumes that the user will adapt to the system. Rarely is consideration given to the ways in which users will adapt the system to their local needs (Brown and Newman, 1985). Continuous process improvement is stunted, however, when users cannot form a mental model of the inner working of the tools they use. Such models are particularly important for dealing with situations in which the system does not perform as expected—the user needs to be able to assess whether the problem resulted from a system malfunction or from the procedure employed. Having characterized some general technological problems and trends in manufacturing, it is important to understand better which segments seem to be leading and which lagging in the technology area. Our knowledge of the ecology of technological innovation is spotty, but two general comments are in order. First, we should note that the Department of Defense has played an important role in funding research and development and in encouraging, even forcing, the pursuit of some technological opportunities in products (such as new materials), processes (such as automated assembly), and improvement procedures (such as the IDEF methodology). It is unclear how many of these innovations spill over into the civilian sector. Second, there seems to be an inordinately large gap between the technology efforts of industrial firms for whom these new opportunities are imperatives and the efforts of those for whom these new opportunities are merely options for increasing profitability. Economists are accustomed to assuming that opportunities to increase profits should (other things being equal) be just as powerful a stimulus for technological change as the imminent

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People and Technology in the Workplace threat of going out of business, if only because one need not presume superhuman insight on the part of managers to assume that they understand that ignoring opportunities will sooner or later lead to crisis. But there seems to be a considerable difference in behavior between firms in the two different situations. A recent study of computer-aided design/computer-aided manufacturing (CAD/CAM) experiences in printed circuit boards (PCBs) and in aircraft hydraulic tubing between 1980 and 1987 (Adler, 1990a) found technological integration efforts to have been disappointingly weak. One of the most promising elements of CAD/ CAM is the possibility of linking design and manufacturing data bases so that the factory can be ''driven'' from the design data. In the manufacture of both PCBs and hydraulic tubing, this had been technically feasible for at least a decade prior to the study. But one-third of the electronics businesses that were contacted for the survey had not yet established any direct linkage between their CAD and CAM systems, even though PCBs were a major component of their products and most had well-developed stand-alone capabilities in CAD and CAM. While the other PCB manufacturers and all four of the sampled aircraft companies had some capability for downloading data from design data bases to manufacturing, none had developed a good set of guidelines to ensure that the data were actually usable, and none had developed a two-way communication link so that manufacturing could pass design revision suggestions directly into the design data base. Where it is a matter of using CAD/CAM to enhance efficiency in manufacturing or design, evidence is accumulating that even in high-tech industries, the United States is lagging behind international competitors. By contrast, some other industries, such as very-large-scale integration (VLSI) semiconductors or complex metal contouring, have been much more aggressive in using CAD/CAM integration opportunities. But these more aggressive industries are characterized by intense competitive pressure to deliver products whose complexity demands CAD/CAM integration. Where firms are faced with an undeniable imperative, management appears much more willing to commit the resources needed to master new technology opportunities. The results of a recent survey by Arthur Young & Company are sadly eloquent: surveying 378 visitors to a factory automation trade show in November 1987, they found that middle managers and engineers disagreed strongly with the common assumption among senior executives that advanced process technology was

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People and Technology in the Workplace being applied widely. The extent to which technology is being applied to manufacturing is "vastly lower than that generally assumed" (Aviation Week and Space Technology, 1988). Future research could usefully focus on going beyond this anecdotal evidence on the ecology of technological innovation and compare the U.S. ecology with that of other industrialized nations. SKILLS According to Denison (1985), education and learning on the job accounted for 26 percent and 55 percent, respectively, of U.S. productivity growth between the 1929 and 1982—a far greater contribution than capital investment, improved resource allocation, or economies of scale. The current supply of skills, however, does not facilitate adaptation to new technological opportunities. The United States graduates and employs proportionately fewer engineers than several of its competitors (National Science Board, 1987, Table 3-15) and employs proportionately fewer in nondefense and development (rather than research) activities. Not surprisingly, managers are much less likely to have technical backgrounds (American Machinist , 1985). These weaknesses in engineering skills are compounded by even more serious weaknesses in the skill base of the nonengineering work force. The quality of our formal schooling is relatively weak. The United States has the highest functional illiteracy and drop-out rate of the advanced industrial nations (Thurow, 1987). The vocational education system is widely seen as being of "limited effectiveness" (Dertouzos et al., 1989). Under-funded community colleges are left to fill the gaps. As a result, in international comparisons, U.S. 10-year-olds ranked eighth in science knowledge, while 13-and 17-year-olds ranked even lower (International Association for the Evaluation of Educational Achievement, 1988). Bishop (1989) argues convincingly that these results do not reflect greater societal diversity. Even the best U.S. schools are significantly behind the performance of the top-tier schools in such countries as Japan, Taiwan, England, Canada, and Finland. Apart from these contextual features of U.S. society, industry does not seem to have formulated a clear understanding of its skill needs, nor has it done enough to meet some of these needs itself. U.S. industry invests considerably less than other nations in developing skills. According to a recent study by the Commission on the Skills of the American Workforce (1990), fewer than

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People and Technology in the Workplace 200 firms in the United States invest more than 2 percent of their payroll on formal training, while leading foreign firms invest up to 6 percent. At the high end, very few firms support an apprenticeship program—in any given year of the last decade, the entire U.S. labor force included only some 300,000 registered apprentices, of whom more than 60 percent were in the building trades (U.S. Department of Labor, 1987). At the low end, an intolerable percentage of the work force is functionally illiterate and innumerate. The quality of the skill formation system is an important competitive handicap when automation raises the skill requirements of the work force. This proposition raises two questions, however. First, there is some debate as to whether workers' current skills—low as they may be in comparison with other countries—are really inadequate given the modest level of skills required by most jobs. Indeed, Rumberger (1981) documents some level of overeducation in the work force. But his analysis shows that this overeducation is restricted to the high end of the educational scale. The skills in which the work force is most deficient are rather elementary ones: basic statistics for statistical process and control activities, problem-solving skills for quality improvement efforts, interpersonal skills for teamwork, and so forth. In this area there is much to learn from our trading partners' educational and training systems. Second, there is an ongoing debate about whether the increasing automation level of industry will, over time, tend to alleviate or aggravate the skills deficiency problem. This debate is in large measure subsumed under a broader debate about the overall direction of industry's skill requirements. Singelmann and Tienda (1985) analyzed the occupational and industrial structure of the economy in recent decades and found that from 1970 to 1980, both industry shifts and occupational shifts within industries were in a skill upgrading direction. Spenner (1988) reviewed the available statistical and case-study research on skill trends over the past few decades; he concludes that substantive complexity has probably increased somewhat since World War II, both in the content of specific occupations and in the mix of occupations in the labor force. These analyses are retrospective; future-oriented analyses suggest that upgrading in skill requirements may accelerate. If skill requirements are driven by automation, and if the rate of change in process technology accelerates as many predict, then the skill formation challenges faced by industry may grow rather than diminish. Singelmann and Tienda forecast that even though the

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People and Technology in the Workplace shift toward services (which—notwithstanding a common misconception—has had an upgrading effect on skill requirements) will slow down over the next decades, the intraindustry trends in occupational structure will continue to create an upgrading pressure. The recent report by the Commission on the Skills of the American Workforce (1990) makes a stronger point—one that parallels the thesis advanced in the preceding section on technology: even if industry is not currently experiencing any widespread skill shortages, and even if technological and demographic projections do not suggest any future massive skill shortages, evidence is accumulating that the current skill level of the industrial work force leaves the United States less able to derive competitive advantage from new technologies than our competitors. Apart from this extensively debated if poorly documented question of skill levels, there is the question of changing types of skill required within occupations to implement new process technologies. Recent research on CAD/CAM highlights several emergent trends in the key occupational categories (Adler, 1990a): Design engineering. The introduction and integration of CAD/ CAM considerably broadens the task of the design engineer. With CAD, the designer can access other parts of a design being worked on by other designers, and a much higher level of design optimization is expected. With CAD/CAM integration, plant equipment is driven directly from the design data, so the manufacturability of product designs becomes much more important; as a result, a higher level of manufacturing knowledge is often expected of the designer. The automated design tools themselves are often difficult to master. They require quite new approaches to the design process at the individual cognitive level. Finally, because the design software is constantly evolving, an ability to absorb new methods on an ongoing basis becomes more important (Majchrzak et al., 1987; Wingert et al., 1981). Design and drafting technicians. Design automation can reduce the need for design and drafting personnel (for a given output level), since some human tasks are eliminated; many managers extrapolate from this to assume that automation will reduce the skill requirements of the remaining technicians. However, the limitations of these systems and the emergence of other higher-level design and drafting tasks typically make a reduction in skill requirements infeasible. Design technicians in CAD/CAM environments usually need higher levels of abstract problem-solving

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People and Technology in the Workplace capability and computer expertise, and CAD/CAM integration requires a greater understanding of the manufacturing constraints summarized in producibility design rules. These skill increases outweigh the reduced requirements in manual drawing skills. As a result, most drafting managers are shifting their recruiting criteria upward, demanding at least an associate degree (Allen, 1984; Jerahov, 1984; Majchrzak et al., 1987; Marchisio and Guiducci, 1983; Salzman, 1985; Senker and Arnold, 1984; Tucker and Clark, 1984). Manufacturing workers. Automation seems to be increasing workers' skill requirements in almost all categories. The key factor behind the general trend toward higher skills is the greater speed of automated processes. As one manager of a PCB assembly plant put it, when speeds for inserting components progress from 5,000 to 12,000 units per hour, and when some of the newer machines operate at 120,000 units per hour, "the consequences of not thinking have gone way up" (Adler, 1990a). CAD/CAM also encourages upgrading of maintenance skill requirements: traditional mechanical, hydraulic, and electrical skills need to be supplemented by electronics expertise. Furthermore, as the span of automation—the integration within a single system of previously separate operations—increases, the need for multicraft maintenance people appears to be increasing (National Research Council, 1986). Manufacturing engineering. This is perhaps the function in which skill upgrading is most dramatic. The proportion of degreed people tends to grow considerably with CAD/CAM: in one PCB shop surveyed, the proportion grew from 40 percent in 1980 to 68 percent in 1986; in another, the proportion grew from less than 15 percent in 1976 to 100 percent in 1986 (Adler, 1990a). The main impetus is the need for manufacturing engineers who can understand and program the new CAM systems; and CAD/CAM integration means that manufacturing engineers need to develop a rigorous characterization of the manufacturing process and of its producibility constraints. For organizations accustomed to promoting their manufacturing engineers from the shop floor, the change is dramatic. System development engineers. The development of new tools for manufacturing and design engineering has until recent years been the task of more experienced manufacturing workers and design engineers. This was sufficient as long as automation opportunities in design and manufacturing environments were limited. With the development of computer tools, new computer

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People and Technology in the Workplace skills are needed to drive the process improvement effort, and specialized systems development departments are created. Even firms that plan to buy rather than to develop their own automation software find that both systems maintenance requirements and the value of customizing their software drive them to establish and maintain significant staffs of highly skilled systems developers (Traversa, 1984). To complete this analysis of skills for CAD/CAM, it should also be noted that automation has tended to increase, rather than reduce, the share in the overall employment of the more skilled categories. As firms invest more in CAD/CAM, the ratio of drafters to design engineers is typically reduced, and the ratio of system developers to system users has typically risen (Adler, 1990a). There are naturally some factors that can modify the strength of the skill upgrading trend. At any given time, the level of skills in a company or an industry will depend on many characteristics of the product and factor markets, business strategies, and institutional context. But the aggregate data suggest that these factors do not reverse the upgrading trend on a sustained basis. The reason is not hard to see. While an increase in the automation level applied to a given task might in some instances reduce skill requirements, automation typically leads (a) to further automation and (b) to changes in product characteristics. Typically, both of these dynamic effects have in turn strong skill-upgrading effects—employees must be able to support and adapt to this dynamic change—and these effects usually far outweigh any static deskilling effect. Skills are a critical factor not only in cases of major technology innovations but also in continuous improvement. The lack of problem-solving skills is a key handicap. Statistical skills are an important element of these problem-solving capabilities. Japanese manufacturing operations have derived great benefit from the statistical skills of their blue-collar workers, since this enables them to mobilize these workers in the quality improvement process rather than rely exclusively on more expensive quality engineers. Developing coaching skills for first-line supervisors and manufacturing engineers is another important element needed to motivate and organize problem-solving activities on the part of blue-collar employees. The firms that are more actively pursuing the opportunities associated with continuous improvement appear to invest considerable resources in training for all levels of personnel in problem-

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People and Technology in the Workplace nology is very dependent on the organization's human resource strategy. Unfortunately, U.S. firms' human resource strategies too often treat labor as a variable cost. This leads to underinvestment in training. It also leads to workers' fear of displacement by automation, and therefore their resistance to new technology, as well as to fear that job-broadening initiatives will lead to the elimination of jobs, and thus a reluctance to share knowledge with incoming workers. As a result, a growing number of firms are revising their human resource strategies. The previous section mentioned the growing interest in employee involvement strategies. We can also note that new technology clauses are now found in 25 percent of union contracts, up from 10 percent in 1961 (Bureau of National Affairs, 1986). CULTURE In many ways, the most difficult challenges in adapting to the faster rate of emergence of new technology options are at the cultural level: When workers are asked to play a more active problem-identification and problem-solving role, the old authoritarian values that polarize "thinking" and "doing" and that separate workers from engineers and managers become obsolete. Innovation efforts are hobbled by the great status differences among different types of engineers, particularly by the gap that often separates product design engineers and manufacturing engineers. Innovation is constrained by status differences between lower and higher levels of managers—such differences impede the shift from the traditional autocratic, top-down strategy process to the more participative process that innovation requires. Following Schein's (1984) suggestion, these cultural challenges can be analyzed at three levels of visibility: artifacts, values, and basic assumptions. The repertoire of artifacts that divide workers from engineers and managers is well documented: white versus blue collars, reserved parking spaces, separate cafeterias. It is noteworthy that the firms that are seeking to communicate a greater commitment to worker participation often go to great lengths to change these outward signs of hierarchy. Managers at Saturn Corporation, for example, spent many months in joint meetings with workers to

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People and Technology in the Workplace design the parking lots and their configuration with respect to the plant. The artifacts that represent a status hierarchy between engineers are no less eloquent. One of the most visible expressions of the differentiation among engineers is in the fact that in many businesses design and manufacturing engineers are not only not at the same average pay levels but also not even on the same pay curves. In some companies with common curves, there is a lower maximum for manufacturing; in some others, manufacturing engineers are not included in profit sharing plans. Even where pay curves are similar across functions, a multiplicity of other symbols and prerequisites communicate the same message of inequality, such as the amount of office space and time to participate in professional activities. Among managers, artifacts of corporate culture such as pay, bonuses, perks, and office location are often symptomatic of a hierarchy of influence that is characteristic of the "segmented" culture that Kanter (in this volume) has shown to be inimical to sustained innovation. It is easy to ignore these artifacts as merely superficial symptoms. But consider the following case. A higlly regarded, innovative company attempted to strengthen its technology development implementation capabilities by cultivating an ethos of teamwork between functions and layers. After several years, they found their efforts stalled by the compensation system. Compensation was managed the old way, with strong incentives for individual rather than group performance and strong differentiations between functions. While top management had supported the effort to change corporate values, it was not willing to incur the costs of the disruption that would ensue if the long-standing compensation system were changed. Artifacts are part of a whole fabric of organizational routines. The degree of consistency of this fabric varies across organizations, but in organizations with "strong" cultures, each thread of the fabric reinforces the others. Cultural change efforts therefore cannot afford to ignore the obvious, the "merely artifactual." Efforts to make U.S. manufacturing more innovative will not succeed if they ignore the artifacts that embody the old ways. Turning to the next, less visible, layer of culture—values—we find that the need for faster manufacturing introduction of new products, for more effective implementation of new process technologies, and for more aggressive improvement efforts appears to encourage the emergence of values of trust, cooperation, and re-

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People and Technology in the Workplace spect. These values contrast with the values such as competitiveness and control that undergird the traditional power hierarchy between workers on the one hand and engineers and managers on the other. The influence of these traditional values can be seen in traditional approaches to equipment design. Many engineers use an ''idiot-proofing" approach in designing equipment, even though it limits the flexibility of the new systems. Some companies still install locks and antisabotage systems on their NC equipment. It is hard to imagine how they can compete effectively over the longer term against firms that by developing a culture based on greater mutual trust can benefit from shop floor programming. Traditional values of competitiveness, hierarchy, and control also mark the relationship between manufacturing and design engineers, with a debilitating effect on many organizations' ability to introduce new products rapidly. The status hierarchy separating design and manufacturing is no longer a reflection of real differences in skill level and contribution, and this hierarchy therefore becomes increasingly dysfunctional. Traditional status and power differentials within the management team are also being challenged. A new strategy is required to deal with the faster rate of technological change, and this strategy requires a shift in values. First, a more participatory process requires a reduction in the status differential that often separates functional from general managers. Second, when heightened competition and multifunctional technological opportunities require greater consistency of functional strategies, it becomes more difficult to justify the traditional hierarchy separating the functions. Finance and marketing have often dictated the overall direction of many organizations, while design engineering spelled out the desired new product line characteristics and manufacturing was left to "implement" the strategy that the other functions had articulated. In companies hoping to capitalize on the synergies between product and process technology opportunities, all the functions will need to enter the strategy formulation process as equals. Value orientations typically reflect and reinforce an underlying set of implicit and usually unconscious assumptions. Some of the key assumptions shaping the values governing relations between workers and managers concern the unity or divergence of underlying interests. Assumptions play a key role in shaping behavior in these relations because firms face a real dilemma: given the unpredictability of a market economy, management needs workers who are both dependable and disposable (Hyman, 1987). It is

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People and Technology in the Workplace easy for critics of values like cooperation and teamwork to scoff when management retains the right to dispose of "redundant" workers in business downturns (see, for example, Parker and Slaughter, 1988). How much of such trust can be expected to survive the trauma of layoffs? This question, however, is not merely rhetorical. There is an accumulating number of case studies (reviewed by Greenhalgh and Rosenblatt, 1984) that suggest that management can indeed retain workers' trust even if they are forced to lay people off. The critical ingredient is whether management behaves in a way that warrants the workers' trust: if workers see the inescapable nature of the layoffs and if the process is managed with integrity, then even though the process is painful in the extreme, it does not have to destroy trust between workers and managers. Feelings of anger may well emerge, but they will be directed at the conditions that made the layoffs inevitable rather than at the "messenger bringing the bad news." But this scenario depends critically on the assumptions that underlie managers' behavior and values. If managers see the firm as accountable only to themselves and the stockholders—if, in other words, they do not acknowledge the workers and the local community as legitimate stakeholders—then managers' behavior cannot but undermine any sense of trust that may have developed. The assumptions held by unions are also important in this context. As Katz (1988) argues, union opposition to some of the current organizational redesign efforts reflects underlying assumptions regarding (1) the real extent of competitive pressures, (2) the nature of technological change, and (3) the underlying structural relationship between workers and managers. Opposition to these organizational innovations can be diversely motivated but often seems to be premised on three assumptions: (1) managers use the pretext of competitive pressure to squeeze workers when they could find other ways to compete, (2) the new process technologies are going to be used by managers to deskill work, and (3) the opposition between workers' and managers' interests is fundamental, and any effort to paper it over will, or should, fail. U.S. industry must also contend with the broader cultural matrix in which it is embedded. The image of collaboration with which many Americans would spontaneously identify is that of baseball or American football, games with clearly defined, specialized roles based primarily on individual contributions. We rarely see ourselves as part of a basketball team engaged in spon-

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People and Technology in the Workplace taneous, reciprocal adaptation around a strategy defined only in its broad outline (Keidel, 1985). These individualistic assumptions are buttressed by the assumption that the most efficient principle of organization is competition rather than cooperation. The drawback of such a set of assumptions should be obvious, especially when compared with the team-oriented culture fostered by many Japanese companies. These handicaps in artifacts, values, and assumptions are not beyond repair. They stem from and are exacerbated by the absence of a clear common external objective. In the absence of such an external objective, the goals of the organization's constituent groups turn inward, toward rivalry with each other. When senior management and union leaders, aided perhaps by real external challenges, can refocus the organization on a common external rival, competitive relationships can be turned into relations of cooperative complementarity. The difference in the performance between externally focused, internally cooperative organizations and organizations that have turned inward and become absorbed by rivalry and hierarchical mechanisms of control will grow over time. A culture of hierarchy was perhaps efficient in more stable contexts; the increasingly dynamic character of product and process technology renders that culture obsolete. As the rate of technological change accelerates, hierarchical approaches will be progressively less effective than collaborative learning approaches. NEW TECHNOLOGY AND COMPETITIVE ADVANTAGE The key problem framing this chapter was the relative undercapitalization of the technological potential by manufacturing industries. The previous sections have outlined the problems in six domains: the need for new technologies, for broader skills, for learning-oriented procedures, for organizational structures, for a more flexible strategy, and for a new cultural of collaboration. These are not the only challenges facing industry, but they might provide us with a lens through which to view some of the others. Take for example the need for effective links to sources of information external to the firm: downstream links to customers; upstream links to materials and component suppliers, equipment vendors, and potentially relevant sources of scientific and technological knowledge; horizontal links through alliances, industry associations, and informal networking. In a more technologically

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People and Technology in the Workplace dynamic environment, these linkages are precious elements in the firm's technological base, providing valuable knowledge that can leverage its internal technological capabilities. Many observers have noted the growth of such linkages in recent years (Friar and Horwitch, 1986; Powell, 1987). Although an extensive analysis of this dimension is beyond the scope of this chapter, we should note that building and maintaining these external links require an appropriate set of internal organizational assets. Managing downstream linkages, for example, requires skills to interpret customers' comments, procedures to ensure the systematic collection and analysis of field information, organizational structures to ensure that results of this analysis flow to the appropriate people and that these people have some incentive to act on these results, a strategy that focuses attention on learning from users, and a cultural context that avoids the "not invented here" syndrome. In concluding, I want to argue that augmenting U.S. industry's ability to capitalize on new technology will require a subtle change in the basic model that characterizes many organizations. In the traditional model, the organization was interpreted as a production system. Such a model is effective—it captures many of the key management challenges—when the rate of environmental change is slow. But in an environment of more dynamic technological and competitive change, the organization will need to be more flexible—it will need to be managed as a system with a dual objective of production and learning. As a result, policies in each domain will need to change: In the static model of the organization, it sufficed for the firm to pause every now and again to incorporate the equipment vendors' recent offerings. More dynamic approaches will demand that the organization be more proactive in creating its own technology development path. More dynamic learning-oriented policies in the skills domain will be needed to focus on problem-identification and problem-solving "know-why" rather than the operational "know-how" emphasized in traditional, static policy; training becomes development. In a more static environment, procedures were designed to buffer departments from each other, so that each department could better focus on its own distinct mission. But in a more dynamic context, missions change and response time becomes a critical competitive factor. Procedures, therefore, need to be seen as ways

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People and Technology in the Workplace to consolidate ongoing learning—including learning how better to coordinate. In a static approach, structure was often allowed to degenerate into fiefdoms; in a dynamic approach, structures must be kept as flat as possible and flexible in their configuration of specialized, differentiated, and coordinated subunits. In the static model, strategy is elaborated by general management, and the role of functional managers is primarily to implement this strategy. The strategy is usually focused on attaining one-time improvements in market and financial outcomes. In the dynamic model on the other hand, strategy is collaboratively elaborated by all layers of the organization and defines both expected results and the path by which the requisite capabilities are to be developed. In the static model, culture is based on hierarchical authority. In the dynamic model, collaboration replaces rivalry, and culture is marked by encouragement to experiment and the right to fail. Without this organizational redesign, the enormous potential of technology will be underexploited. REFERENCES Adler, P. S. 1990a. Managing high-tech processes: The challenge of CAD/CAM. In Managing Complexity in High-Technology Industries, Systems and People, M. A. Von Glinow and S. A. Mohrman, eds. Oxford, England: Oxford University Press. Adler, P. S. 1990b. NUMMI, Circa 1988. Department of Industrial Engineering and Engineering Management, Stanford University. Adler, P., and K. Ferdows. 1989. The Chief Technology Officer. IEEM, Stanford University. Allen, C. W. 1984. A case history of introducing CAD into a large aerospace company. In CADCAM in Education and Training, P. Arthur, ed. London: Kogan Page. American Machinist. 1985. Manufacturing education. June:107. Automation Technology Products. 1985. Sink or CIM? Campbell, Calif.: Automation Technology Products. Aviation Week and Space Technology. April 11, 1988. Bishop, J. 1989. Scientific Illiteracy: Causes, Costs and Cures. Cornell University Working Paper 89–12. Bloom, S. M. 1985. Employee Ownership and Firm Performance. Ph.D. dissertation, Harvard University. Brown, J. S., and S. E. Newman. 1985. Issues in Cognitive and Social

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